On Thursday, California lawmakers passed Gov. Gavin Newsom’s revised 2019-20 budget.
It relies on a surplus to add billions to the state’s reserve funds, which will bring the state’s total so-called rainy day fund to $19 billion. It puts hundreds of millions of dollars into other reserves, too, including ones for schools and social services.
Legislators are still working out final details of some aspects of the budget through so-called trailer bills, which can be passed after the main budget bill.
The bill they passed will provide the major framework for state spending in the next fiscal year.
The governor and lawmakers will continue negotiations over a closely watched effort to change California tax law — one that is essential to Newsom’s plan to expand a tax credit for the state’s lowest earners.
The negotiations are proving to be extremely difficult. Most significant is an effort to bring in $1.7 billion in revenue by rewriting state tax law to more closely conform to changes made in 2017 to federal rules. The money is key to the governor’s signature effort to triple the size of California’s tax credit for those with the lowest annual incomes.
Because the proposal would result in a tax increase on some state filers, it requires a two-thirds vote in each legislative house — and there’s been significant resistance among some Assembly Democrats.
The bill approved Thursday includes an assumption that tax revenue will materialize.
If lawmakers fail to sign on, it could present significant challenges to the budget’s financial architecture, in the way funding is allocated to K-12 schools and community colleges.
Most notably, the state’s new budget includes a sizable effort to expand access to healthcare — a combination of larger subsidies for purchasing insurance and a first-in-the-nation promise to provide government-subsidized Medi-Cal coverage to low-income residents up to the age of 25, regardless of their immigration status.
The governor and legislators agreed to spend $195 million for training childcare workers and another $300 million on building new school facilities for full-day kindergarten. The plan also allocated $645 million for improved special education efforts, with much of that money going to services for children as young as 3.
The budget sets aside money to expand fee waivers for students in their second year of community college and expands enrollment on University of California and California State University campuses.
It also adds enough funding to the competitive Cal Grant program to provide scholarships to as many as 41,000 students a year.
The lawmakers agreed to take action on providing clean drinking water to communities with contaminated supplies.
Among the stumbling blocks that remain, is a proposal to create a new telephone service tax to fund 911 operation improvements.
Legislators also continue to haggle over the details of how to allocate $650 million in local government grants to address the state’s never-ending homelessness crisis.
Although Californians may criticize some elements in the budget, the fact is that many fiscal problems are solvable as long as the state continues to prosper with growth and expanding incomes.
The budget reflects many attempts to help more low income people across the highly populated terrain, rather than just a small percentage of the most prosperous earners who should already fully appreciate the benefits of a soaring economy.